Funding to fintech companies fell 18 per cent in the first quarter of 2022 to $28.8B, even as deals reached a record-high 1,399 — up 7 per cent QoQ according to the latest report from CBInsights.
The report notes that while Q1’22 saw the largest percentage drop in quarterly funding since 2018, it was still the fourth strongest quarter for funding on record.
Fintech startups in Africa saw a record 69 deals in the first quarter of this year (Q1’22), up 44 per cent QoQ and the highest ever for the continent. The continent’s fintech startup funding totalled $293M — the third-strongest quarter ever with top deals going to vehicle financing provider Moove Africa and farmer financing company Apollo Agriculture.
The increase in the number of deals sealed by African startups in the sector shows growing confidence in the continent as investors and firms recognize its huge potential for fintech sector growth.
The report established that fintech are drawing significant funding from non-VC investors, including asset & investment managers, CVCs, and angel investors. “4 Of the top 6 fintech investors were not VCs. Fintechs are drawing significant funding from non-VC investors, including asset & investment managers, CVCs, and angel investors. Asset management firm Tiger Global Management continues to be the most active fintech investor, backing 39 companies this quarter — 11 more than the top fintech VC, Global Founders Capital.”
The report further noted a decline in banking and insuretech funding. “Funding to insurtech startups declined 58 per cent QoQ to $2.2B. This was the largest percentage drop in funding for any fintech sector. The decrease in funding comes with fewer mega-rounds compared to previous quarters,”
The decline in funding, especially from VC, means that fintech founders will face a hard time raising money in earlier seed-stage deals. Consequently, fewer companies will also be available for those later stage deals in future.
Be sure to register for the African Fintech Summit to stay updated with the latest trends shaping the sector.